Yes, you can sell your house even if you’re behind on mortgage payments. As long as your home hasn’t been foreclosed and sold at auction, you have options. The key is acting fast—the sooner you take action, the better your choices and the more money you can keep.
This guide walks you through simple ways to sell when you’re behind. We’ll cover cash buyers, short sales, and other paths that help you avoid foreclosure and move forward with less stress.
Understanding Your Situation When Behind on Payments
When you miss mortgage payments, things move quickly. Most lenders report late payments to credit agencies after 30 days. After 90 days without payment, they start the foreclosure process. This means you typically miss about four monthly payments before serious legal action begins.
In early 2025, foreclosure activity increased, with about 94,000 properties having foreclosure filings in the first quarter. You’re not alone in this fight.
Above Water vs. Underwater
Your home’s value compared to what you owe matters a lot.
Above water means your home is worth more than your mortgage balance. If you sell, you can pay off the loan and possibly walk away with cash. This gives you the most options.
Underwater (or upside down) means you owe more than your home is worth. Selling gets trickier because the sale won’t cover your full debt. But you still have choices like short sales.
How Much Time Do You Have?
Time depends on where you are in the process:
- 30-90 days late: Early stage. You have the most options here.
- 90-120 days late: Foreclosure notices may arrive. Banks start legal steps.
- 120+ days late: Foreclosure moves forward. Your window is closing fast.
The average time to complete foreclosure in 2024 was 762 days, but this varies widely by state. Some states like Louisiana take years, while others like New Hampshire move in just 165 days.
Why Sell Instead of Waiting?
Selling before foreclosure protects you in many ways.
Protect Your Credit Score
Foreclosure damages your credit score much more than selling. A foreclosure stays on your credit report for seven years and makes it hard to buy another home, rent an apartment, or even get a job.
Selling—even through a short sale—does less harm. You can recover faster and rebuild your credit sooner.
Avoid Extra Costs
Foreclosure comes with legal fees, court costs, and penalties that pile up fast. Every month you wait, late fees and interest charges grow. Selling stops these costs immediately.
Keep Some Control
When you sell, you choose the buyer and closing date. You work with people who want to help you. In foreclosure, the bank takes over completely. You lose all say in what happens.
Walk Away with Dignity
Foreclosure means eviction. Selling means you leave on your terms. You pack your things at your own pace and avoid the shame of being forced out by sheriff’s deputies.
Your Best Options for Selling While Behind
You have several good paths forward. The right choice depends on your home’s value, how far behind you are, and how fast you need to move.
Option 1: Sell to a Cash Buyer (Fastest Solution)
Cash buyers like We Buy Colorado buy homes in any condition and close quickly. This is often your fastest way out.
How It Works:
- Contact a cash buyer and share basic info about your home
- Get a fair cash offer within 24-48 hours
- Choose your closing date (often 7-14 days)
- Walk away with cash to pay off your mortgage
Benefits:
- Speed: Close in days, not months
- No repairs needed: They buy as-is, saving you thousands
- No fees: No agent commissions or closing costs
- Certainty: No deals falling through or buyer financing issues
- Privacy: No showings or strangers walking through your home
Best For:
- Homeowners facing immediate foreclosure
- Properties needing major repairs
- Anyone who wants a simple, stress-free sale
If you’re in Colorado and behind on payments, selling to a cash home buyer can stop foreclosure and give you breathing room.
Option 2: Short Sale
A short sale means selling for less than you owe. The lender agrees to take the sale money and forgive the rest.
How It Works:
You need lender approval for a short sale. The lender must believe you can’t catch up on payments and that the home won’t increase in value enough to cover the debt.
Steps:
- Contact your lender’s loss mitigation department
- Submit a hardship letter explaining why you can’t pay
- Provide financial documents (tax returns, pay stubs, bank statements)
- Find a buyer and get their offer
- Submit everything to the lender for approval
- Wait 30-90 days for their decision
- Close the sale if approved
Benefits:
- Avoid foreclosure
- Less credit damage than foreclosure
- Lender forgives remaining balance (usually)
- Stay in your home until closing
Challenges:
- Takes several months
- Requires lots of paperwork
- Lender must approve everything
- Still hurts your credit (but less than foreclosure)
- You get no money from the sale
Best For:
- Underwater homeowners who can’t bring cash to closing
- People with time before foreclosure auction
- Those who can handle a complex process
Option 3: Traditional Sale with a Real Estate Agent
If you have equity and aren’t facing immediate foreclosure, listing with an agent might work.
How It Works:
- Hire a real estate agent
- Prepare your home (repairs, cleaning, staging)
- List on the market
- Wait for buyers and negotiate offers
- Close in 30-60 days
Benefits:
- Potentially get top dollar
- Professional marketing and negotiation
- Wider buyer pool
Challenges:
- Takes 2-4 months on average
- Requires repairs and updates
- Pay 5-6% commission to agents
- No guarantee it sells in time
- Buyers can back out
Best For:
- Homeowners with equity
- Those with 3-4+ months before foreclosure
- Homes in good condition
Option 4: Deed in Lieu of Foreclosure
This means giving your house to the lender voluntarily. You sign over the deed, and they cancel your debt.
How It Works:
You transfer ownership to the lender, which lets you avoid foreclosure. You won’t get any money, but it can relieve your debt and minimize financial strain.
Benefits:
- Faster than foreclosure
- Less credit damage
- No more mortgage payments
- Avoid eviction
Challenges:
- You get nothing from the sale
- Still affects credit negatively
- Lender must agree
- Not all situations qualify
Best For:
- Last resort option when short sale fails
- Underwater homeowners with no other choice
Alternatives to Selling: Staying in Your Home
Before selling, explore whether you can stay in your home. These options might help you catch up on payments.
Mortgage Forbearance
As of January 2025, about 200,000 homeowners were in forbearance plans. This temporarily pauses or reduces your payments while you get back on your feet.
How It Works:
Contact your lender and explain your hardship. They may pause payments for 3-12 months. When forbearance ends, you’ll need a plan to repay what you missed.
Good For:
- Temporary hardships (job loss, medical bills)
- People who expect their income to improve soon
Not Good For:
- Long-term financial problems
- When you can’t afford to repay missed payments later
Loan Modification
This permanently changes your loan terms to make payments affordable. The lender might lower your interest rate, extend your loan term, or reduce the principal balance.
How It Works:
Apply through your lender. Provide financial documents showing your current income. If approved, you get a new payment amount you can afford.
Good For:
- Permanent income reduction
- Long-term payment relief
Refinancing
If your credit isn’t too damaged, refinancing could lower your payment by getting a better interest rate or longer loan term.
Requirements:
- Decent credit score
- Stable income
- Not too far behind on payments
Best For:
- Early stages of delinquency
- Homeowners with improving finances
Rent Out Your Home
Becoming a landlord can generate income to cover your mortgage. Move in with family or find cheaper housing while renting your house.
Consider:
- Will rent cover your full mortgage payment?
- Can you handle landlord duties?
- What do local laws say about renting?
- Do you have money for repairs and vacancies?
Bankruptcy (Last Resort)
Chapter 13 bankruptcy can help restructure debts, allowing manageable payments while keeping your house. Chapter 7 is for people without income to pay debts.
Important: Bankruptcy has serious long-term consequences. Talk to a bankruptcy attorney before considering this option.
Step-by-Step: How to Sell Fast While Behind
Here’s exactly what to do when you need to sell quickly.
Step 1: Figure Out Your Numbers (Day 1)
- Check how much you owe on your mortgage
- Look up your home’s current value (use Zillow or similar sites as a starting point)
- Calculate if you’re above or below water
- Find out when your next foreclosure deadline is
Step 2: Contact Your Lender (Day 1-2)
Call your mortgage company immediately. Tell them you plan to sell. Ask about:
- Your exact payoff amount
- Any programs they offer
- How much time you have
- Whether they’ll work with you on a short sale if needed
Step 3: Choose Your Selling Method (Day 2-3)
Based on your situation:
- Need to close in days? Contact cash buyers
- Underwater with 2-3 months? Pursue a short sale
- Above water with time? Consider a traditional sale
Step 4: Get Offers (Day 3-7)
For cash buyers: Fill out a simple form online or make one phone call. Most give offers within 24 hours.
For agents: Interview 2-3 agents and pick one who knows distressed sales.
Step 5: Accept and Close (Day 7-30)
Cash buyers close in 7-14 days. Traditional sales take 30-60 days. Short sales can take 90+ days.
Stay in contact with everyone involved. Respond quickly to any requests. The faster you move, the more you protect yourself.
Common Mistakes to Avoid
Don’t Ignore Your Lender
Most lenders wait 90 days before beginning foreclosure proceedings. Many want to work with you because foreclosure costs them money too. Call them first.
Don’t Wait Too Long
Every day matters. The earlier you act, the more choices you have. Don’t wait until you get an auction notice.
Don’t Spend Money on Repairs
If you’re selling to a cash buyer or doing a short sale, skip the repairs. They buy as-is. Save your money for moving expenses.
Don’t Fall for Scams
Watch out for:
- Anyone asking for upfront fees
- “Rescue” companies promising to save your home for a fee
- People pressuring you to sign over your deed
- Offers that sound too good to be true
Work with licensed, local companies with good reviews. In Colorado, We Buy Colorado has a track record of helping homeowners in tough spots.
Don’t Go It Alone
Talk to professionals:
- Real estate attorney (especially for short sales)
- CPA or tax advisor (for tax implications)
- Housing counselor (free through HUD)
- Experienced real estate agent or cash buyer
Understanding the Impact on Your Finances
Credit Score Effects
Different options hurt your credit differently:
- Traditional sale: Little to no impact if you pay off the loan
- Short sale: Drops score 85-160 points; stays on report 7 years
- Deed in lieu: Similar to short sale
- Foreclosure: Drops score 150-300+ points; stays on report 7 years
You can rebuild credit after any of these, but foreclosure takes longest.
Tax Consequences
When a lender forgives debt (like in a short sale), the IRS might consider that taxable income. However, the Mortgage Forgiveness Debt Relief Act has historically provided protection for primary residences.
Talk to a tax professional. Laws change, and your specific situation matters.
Future Home Buying
- After short sale: Can buy again in 2-4 years with good credit repair
- After foreclosure: Wait 3-7 years depending on loan type
- After bankruptcy: Wait 2-4 years for Chapter 13, 4-7 years for Chapter 7
Special Situations
Inherited Property with Missed Payments
If you inherited a home that’s behind on payments, you have options. You can sell it fast to pay off the debt. Dealing with inherited property gets complex, so professional help matters.
Going Through Divorce
Divorce complicates home sales. If neither of you can afford the payments alone, selling quickly splits the burden. A cash buyer simplifies the process when emotions run high.
Investment Properties
Landlords struggling with rental properties face different rules. Investment properties don’t qualify for all the same protections as primary residences. Selling quickly often makes sense.
Homes Needing Major Repairs
Properties requiring extensive repairs can’t sell traditionally when you’re behind on payments. You don’t have money to fix them up. Cash buyers solve this by purchasing as-is.
What Happens If You Do Nothing?
Understanding the foreclosure process helps you see why acting fast matters.
The Foreclosure Timeline
- Miss first payment: Grace period ends after 15 days
- 30 days late: Late fees hit; credit score affected
- 60 days late: More late fees; second hit to credit
- 90 days late: Notice of default arrives
- 120 days late: Foreclosure formally begins
- 3-6 months later: Sale date scheduled
- Auction day: Home sold to highest bidder
- Post-auction: 30-day eviction notice
Some states like Louisiana average 3,520 days to complete foreclosure, while New Hampshire averages just 165 days. Your state’s timeline matters.
After Foreclosure
Even after your home sells at auction, problems continue:
- Severe credit damage lasting 7 years
- Difficulty renting (landlords check credit)
- Higher insurance rates
- Possible deficiency judgment (you still owe the difference)
- Emotional toll and stress
Frequently Asked Questions
Can I sell my house if I’m several months behind?
Yes. As long as the foreclosure auction hasn’t happened, you can sell. But time is tight. Contact a cash buyer immediately for the fastest option.
Will selling hurt my credit?
If you sell before foreclosure and pay off your mortgage, your credit takes minimal damage. You’ll see some impact from the late payments, but nothing like foreclosure.
Do I have to pay agent fees if I’m behind?
Not if you sell to a cash buyer. Traditional agents charge 5-6% commission. Cash buyers don’t charge fees or commissions.
What if I’m underwater?
Pursue a short sale with lender approval. Or walk away through deed in lieu of foreclosure. An experienced professional can guide you through the best option.
How long does a cash sale take?
Most cash buyers close in 7-14 days. Some can close even faster if you need immediate help.
What documents do I need?
Basic documents include:
- Recent mortgage statement
- Property tax info
- HOA documents (if applicable)
- Proof of identity
- Authorization for lender to talk to your representative (for short sales)
Can I sell if I already got a foreclosure notice?
Yes! You can sell right up until the auction. But move fast. Contact multiple cash buyers immediately to compare offers.
What about my belongings?
You have time to move your things before closing. Cash buyers work with your timeline. Don’t rush and leave valuable items behind.
Why Colorado Homeowners Trust We Buy Colorado
If you’re facing foreclosure or can’t keep up with payments, We Buy Colorado offers a simple solution.
What Makes Them Different:
- Fair, transparent cash offers within 24 hours
- Close on your schedule—as fast as 7 days
- Buy homes in any condition throughout Colorado
- No fees, no commissions, no hidden costs
- Experienced with foreclosure situations
- Local team that understands Colorado real estate
They serve homeowners in Denver, Colorado Springs, Aurora, Fort Collins, and across the state. Whether you’re in Lakewood, Boulder, or a smaller town, they can help.
Taking Action Today
Every day you wait costs you money and options. Here’s what to do right now:
- Stop panicking and make a plan: Take a deep breath. You have options.
- Call your lender today: Explain your situation and ask what programs they offer.
- Get a cash offer: Contact We Buy Colorado for a no-obligation offer. It takes 5 minutes and costs nothing.
- Compare your options: Look at selling vs. staying. Run the numbers.
- Make a decision this week: Speed matters. Choose your path and commit.
- Execute your plan: Follow through quickly. Don’t second-guess yourself.
Resources for Colorado Homeowners
- HUD Housing Counseling: Free advice at 1-800-569-4287 or HUD.gov
- Colorado Housing and Finance Authority: State resources at CHFA.org
- Legal Aid: Free legal help for qualifying homeowners
- Making Home Affordable Program: Federal assistance programs
Final Thoughts
Falling behind on mortgage payments feels overwhelming. But you’re not powerless. You have real options to avoid foreclosure and move forward.
The key is acting fast. Whether you sell to a cash buyer, work out a short sale, or find another solution, do something today. Tomorrow the situation gets harder.
If you need to sell quickly in Colorado, We Buy Colorado stands ready to help. They’ve helped hundreds of homeowners in your exact situation. You’re not alone, and you don’t have to face foreclosure.
Take the first step now. Fill out a quick form or make one phone call. In 24 hours, you could have a cash offer and a clear path forward. The stress can end, and your fresh start can begin.
Don’t let fear or shame stop you from reaching out. Every homeowner facing this situation feels the same way. But the ones who act quickly come out better on the other side. Learn how it works and see how simple selling can be.
Your home situation doesn’t define you. It’s just a bump in the road. With the right help, you’ll get through this and come out stronger. Take action today, and give yourself the gift of a fresh financial start.